Chinese Drywall Victims Awarded $2.6 Million, Judge Says Homes Must be Gutted

The owners of seven Virginia homes contaminated with toxic Chinese drywall have been awarded $2.6 million by the federal judge overseeing the Chinese drywall multidistrict litigation (MDL) currently underway in New Orleans. The trial was considered a “bellwether” or test case, and the decision could affect how lawsuits by thousands of other homeowners are settled.

The ruling by U.S. District Court Judge Eldon E. Fallon mandates that the plaintiffs’ homes be gutted down to the studs. The Judge also ruled that the plaintiffs were entitled to damages for the cost of personal property damaged by the drywall gases, relocation costs, and loss of use and enjoyment of the home.

In his ruling, Judge Fallon wrote that Chinese drywall “has a significantly higher average concentration of strontium and significantly more detectable levels of elemental sulfur” than U.S.-made drywall, and that the “level of corrosive sulfur gases emitted by Chinese drywall … exceed the safe level established by recognized standards, peer reviewed literature.”

“The sulfur gases released by Chinese drywall cause offending odors in homes, making them hard if not impossible to live in,” Judge Fallon said.

In addition to removing the toxic drywall, Judge Fallon’s order calls for the removal of all electrical wiring, the entire HVAC system, and many other items such as appliances, carpet, cabinetry, trim work and flooring. His ruling goes further than remediation guidelines released earlier this month by the Consumer Products Safety Commission (CPSC) and the Department of Housing and Urban Development (HUD).

Judge Fallon’s ruling covered only property damage and did not look at possible health effects. According to the Associated Press, the first cases with medical claims won’t be considered by the court until late 2010 or early 2011.

The cost of remediation as prescribed by Judge Fallon’s order will run anywhere between $200,000 to $300,000. However, it’s still not clear who will foot the bill. The main defendant in this case, Taishan Gypsum Co., never responded to lawsuits and did not have a lawyer present for the trial. Civil judgments in U.S. courts aren’t enforced in China.

Plaintiffs lawyers have said in the past that they would seek to seize Taishan Gypsum’s U.S.-bound vessels and shipments if it continues to ignore lawsuits.

So far, only one Chinese manufacturer — Knauf Plasterboard Tianjin Co. — has responded to U.S. suits. A separate trial naming Knauf as a defendant was held before Judge Fallon last month. His decision in that case is still pending.

Since late 2008, the CPSC has received more than 3,000 reports from residents in 37 states, the District of Columbia, and Puerto Rico regarding defective Chinese drywall. Gases emitted from Chinese drywall are being blamed for significant property damage, including damage to HVAC systems, smoke detectors, electrical wiring, metal plumbing components, and other household appliances. These gases also produce a sulfurous odor that permeates homes, and cause metals, including air conditioning coils and even jewelry, to corrode. People living with Chinese drywall have also suffered eye, respiratory and sinus problems that may be linked to the gases.

In addition to the Chinese drywall lawsuits consolidated before Judge Fallon, thousands of cases are also pending in state courts.

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